Deferments

One may hear deferments referred to as use value assessment, present use value,
or just simply a "tax break". Properly referred to as use value, the term
means the value of land in its current use as agricultural land, horticultural land
or forestland, and is based solely on its ability to produce income.

There are three basic programs involved:

Agricultural

Agricultural land means land that is a part of a farm unit actively engaged in the
commercial production or growing of crops, plants, or animals under a sound management
program. Agricultural land includes woodland and wasteland. The requirements for
an agricultural deferment are as follows:

May consist of more than one tract of agricultural land, but at least one of the
tracts must meet the requirements and each tract must be under a sound management
program.

One tract must consist of at least 10 acres that are in actual production and are
not included in a farm unit.

Must have produced an average gross income of at least one thousand dollars ($1,000)
for the three years preceding January 1 of the year in which this benefit is claimed.
Gross income includes income from the sale of the agricultural products produced
from the land and any payments received under a governmental soil conservation or
land retirement program.

If individually owned, the property must be the owner's residence or have been owned
by the current owner or a relative of the current owner for four years preceding
January 1 of the year in which this benefit is claimed.

Forestland

Forestland means land that is part of a forest unit that is actively engaged in
the commercial growing of trees under a sound management program. Forestland includes
wasteland that is part of the forest unit, but the wasteland included in the unit
shall be appraised under the use value schedules as wasteland. The requirements
for a forestland deferment are as follows:

May consist of more than one tract of forestland, but at least one of the tracts
must meet the requirements and each tract must be under a sound management program.

One tract must consist of at least 20 acres that are in actual production and are
not included in a farm unit.

If individually owned, the property must be the owner's residence or have been owned
by the current owner or a relative of the current owner for four years preceding
January 1 of the year in which the benefit is claimed.

Horticultural

Horticultural land means land that is a part of a horticultural unit that is actively
engaged in the commercial production or growing of fruits or vegetables or nursery
or floral products under a sound management program. Horticultural land includes
woodland and wasteland that is a part of the horticultural unit, but the land included
in the unit shall be appraised under the use value schedules as woodland or wasteland.
The requirements for a horticultural deferment are as follows:

May consist of more than one tract of horticultural land, but at least one of the
tracts must meet the requirements and each tract must be under a sound management
program.

One tract must consist of at least 5 acres that are in actual production.

Must have produced an average gross income of at least one thousand dollars ($1,000)
for the three years preceding January 1 of the year in which this benefit is claimed.
Gross income includes income from the sale of the horticultural products produced
from the land and any payments received under a governmental soil conservation or
land retirement program.

If individually owned, the property must be the owner's residence or have been owned
by the current owner or a relative of the current owner for four years preceding
January 1 of the year in which the benefit is claimed.

If property loses its eligibility for any reason, deferred taxes become due for
the current year plus three previous years, plus interest for all prior years. If
only a part of the qualifying tract loses its eligibility, a determination shall
be made of the amount of deferred taxes applicable to that part, and that amount
shall become payable with interest.

Historical Property

Historical property is real property designated as a historic structure or site
by a local ordinance adopted by the Historical Property Commission. Property that
is classified as historical shall be taxed on the basis of fifty percent (50%) of
the true appraised value. After property has been designated as historical property,
the owner is required to contact the local Tax Assessor's Office for a historical
deferment application.

The deferred taxes will not become due unless or until the property loses its eligibility
for the benefit of this classification. This could occur because of a change in
an ordinance designation or a change in the property which causes its historical
significance to be lost or substantially impaired.

If additional information is needed, please contact the Tax Assessor's Office in
the county in which you live. These laws apply to all of North Carolina.

Builder's Inventory

The General Assembly enacted Session Law 2009-308 which provides a deferment of
taxes levied on residences owned and constructed by builders that are unsold as
of January 1 of each year. The deferment may be granted based on taxes levied on
improvements only – the land is fully taxable. This legislation is effective for
2010 and will sunset in 2013.

Taxes will be deferred only on a residence owned and constructed by a builder. The
residence must be unoccupied and a certificate of occupancy must have been issued
prior to January 1. A copy of the certificate of occupancy must be submitted
with the application for deferment.

The tax collector will notify the builder of the accumulated sum of deferred taxes
and interest by showing said amounts on the annual tax bill. The maximum number
of years taxes levied on improvements may be deferred is three years. All deferred
taxes plus interest must be paid at the time of a disqualifying event.